The company's 24Q1 revenue/net profit ratio was +39.8%/33.5%. Returning home & new product sales led to revenue exceeding expectations. Looking ahead to the whole year, the sales pace will be orderly, reserve new products in advance, promote them in a timely manner, increase network coverage and frozen displays in an orderly manner, and consolidate the channel foundation before the peak season. Specialty drinks have strong potential, and the second curve is beginning to take shape. Product matrix+outlet development drives continued high revenue growth, and cost improvements and the release of scale effects of new products are expected to increase profits.
The results surpassed expectations, and the advance revenue showed potential. In 24Q1, the company achieved revenue/net profit/net profit deducted from mother of $34.8/6.62 billion, +39.8%/33.5%/37.8% year-on-year. The return of the Spring Festival & the release of new products led to revenue exceeding expectations. The company's contract debt at the end of 24Q1 was 2.69 billion, an increase of 1 billion yuan over the previous year, and an increase of 80 million over the previous year (an increase of 60 million yuan in the same period last year), showing the potential of advance revenue.
The second curve is impressive, and the expansion of outlets is driving continued high growth outside the province. By product, the revenue of Dongpeng Special Drink was +30.1% year-on-year to 3.1 billion in 24Q1, mainly due to returning home to drive sales of this product to exceed expectations. Other beverages were +257% to 380 million, of which the total revenue for hydrating and drinking was about 6.9%. The second curve performed brilliantly. Looking at the subregion, the company was +9.4%/+1.6% to 92/290 million in Guangdong/Guangxi, and +48.1%/+54.5%/+69.1%/+95.4% in East China/Central China/Southwest/North China compared to 50,000/5.3/3.9/430 million. On the basis of the orderly expansion of product outlets outside the province, the second curve accelerated coverage. In addition to the Guangdong region, total revenue of 2.56 billion yuan was achieved, +55.2% over the same period last year, accounting for an increase of 7.3 pcts to 73.5%.
The white sugar & product structure suppressed gross profit, and the net profit margin declined slightly due to increased investment costs. The company's 24Q1 gross margin was -0.76pcts year-on-year to 42.8%, which is related to the rise in the cost of white sugar and the weak profitability of new products compared to this product due to insufficient scale effects. Q1 The company increased freezer sales before the peak season. Sales expenses were +52.5% to 600 million compared to the same period, driving a sales expense ratio of +1.43pcts to 17.1%. Management fee rate - 0.3 pct to 2.9%. The increase in interest income from time deposits led to a reduction in financial expenses from -5.9 million to -4.57 million.
Actual tax rate - 2.47pcts to 20.0%. Overall, the company's 24Q1 net margin was 0.9 pct to 19.1%.
Investment advice: New products performed well, and profits continued to increase with high investment. The company has an orderly sales pace, reserves new products in advance and promotes them in a timely manner, increases network coverage and frozen displays in an orderly manner, consolidates the channel foundation before the peak season, and has had a good start. Looking ahead, the company's product momentum is strong. The second curve is beginning to take shape, and the product matrix+network development drive continued to increase revenue. Cost improvements and the release of new product scale effects are expected to lead to an increase in profits. The 24-26 EPS forecast was slightly adjusted to 6.64, 8.45, and 10.54 yuan. From a medium- to long-term perspective, they are optimistic about the company's diversification of categories and national layout space, maintaining the target price to 211 yuan, corresponding to the 25-year 25x valuation, and maintaining a “highly recommended” rating.
Risk warning: rising costs, falling short of expectations in the promotion of new products, lifting of the ban on restricted shares, etc.